The bottom line

<strong>The Wal-Mart Effect: how an out-of-town superstore became a superpower</strong>

Charles Fi

Salmon used to be a luxury for the average American family, but nowadays it is a weekly staple - because Wal-Mart sells fillets of it, conveniently "pin-bone-out", for as little as $4.84 (£2.66) a pound. The fish are farmed by the millions in the fjords of southern Chile, processed in low-wage factories there, and freighted unfrozen to arrive pink and gleaming, within 48 hours of being killed, on the counters of thousands of Wal-Mart superstores across the US. The price per pound, Charles Fishman points out in this meticulously researched and richly anecdotal book, is less than the postage it would cost you to mail the fish back to Chile.

The impact of that price on American grocery bills and eating habits, on the economy of Chile and on the ecology of a distant corner of the Pacific polluted by industrial quantities of fish food and faeces, is what Fishman calls the "Wal-Mart effect". It is, in his view, neither wholly bad nor wholly good - but it is very, very big. Wal-Mart is a force in America's economic life to a far more significant degree than its nearest British equivalent, Tesco, over here. The Arkansas-based chain, founded by Sam Walton in 1962, is not simply the biggest private-sector em-ployer and the biggest holder of retail market share. Its low-price strategy, so pervasive that other stores follow suit even when they are not direct competitors, plays a principal role in holding down US inflation; its relentless demand for low prices from suppliers has been a major driver in the export of US manufacturing jobs to China and elsewhere.

But it is a relief to find that Fishman - an editor at Fast Company magazine - is not just another journalist on a mission to expose Wal-Mart as a monstrous conspiracy against the little guy, as the Wall Street Journal writer Bob Ortega tried earnestly to do in In Sam We Trust (1998). Fishman is clearly troubled by Wal-Mart, but he exercises an open mind. He recites the litany of cases against Wal-Mart for using and abusing illegal immigrant labour, and for sourcing goods from cruel third-world factories, but he acknowledges that the company now has a clear code of conduct for suppliers and a team of inspectors (albeit a relatively small one) trying to make it stick. He repeats accusations that Wal-Mart is excessively secretive and that its employees and suppliers speak to the press at their peril, but he accepts that there would be no profit for the company in giving away valuable commercial data.

He reminds us that other supermarkets and vast numbers of downtown groceries have gone to the wall because of the arrival of Wal-Mart's soulless giant sheds. But he observes that Wal-Mart is not simply a predator. It does not just lower its prices until the competition has been destroyed, then raise them again: it keeps them low, as its slogan says, "always". And that is why even customers who declare themselves in surveys to be "conflicted" - actively disliking Wal-Mart for its impact on communities and jobs - still shop there more than once a week, spending almost as much as those who declare themselves to be Wal-Mart's "champions".

In effect, Fishman concludes, Wal-Mart does nothing more sinister than sell a $3 item of merchandise for $2.97. The frugality and focus that have enabled it to do this consistently for 44 years are largely to be admired, even when they extend to forcing suppliers to install toll-free phone lines so that Wal-Mart does not have to bear the cost of calling for deliveries. Sam Walton himself, a bird-hunting backwoodsman who drove a dog-chewed pick-up long after he became a billionaire, was an authentic American hero of capitalism.

Yet Wal-Mart today is no longer the company that Walton bequeathed when he died in 1992. It has multiplied in scale and reach at home and abroad (it owns Asda here), acquiring unprecedented market power - and this angers unions, environmentalists and journalists. But its managers do not have a secret plan to rule the world; they just sell as much cheap stuff as they can. If there is anything sinister in that, it is the hypnotic effect it has on American shoppers. They happily bought Wal-Mart's $2.79 gallon jars of pickled cucumbers even though they could not possibly eat them all - until the manufacturer went bust trying to supply them. When the price of underpants was slashed, they bought astonishing quantities and stockpiled them.

In an era of rampant over-consumption, don't blame Wal-Mart for the "Wal-Mart effect": blame its customers, especially the "conflicted" ones.

Martin Vander Weyer is the author of Falling Eagle: the decline of Barclays Bank (Weidenfeld & Nicolson)